Treasurer Peter Gutwein takes on Western Australia in public discussion paper on GST revenue changes

Treasurer Peter Gutwein has taken a swipe at Western Australia in an explanatory public paper on GST revenue allocation.

Treasurer Peter Gutwein.

Two weeks ago at the COAG meeting in Hobart, Western Australian Premier Mark McGowan told Prime Minister Malcolm Turnbull he “expected action” on GST revenue redistribution, and that Western Australia was “badly treated” compared to other states and territories.

In response Premier Will Hodgman said he was “delighted” there was no decision made to change the GST.

The state government is now preparing a submission to the federal government’s Productivity Commission’s GST inquiry, with the paper released on Sunday a public prelude to that.

“Some states simply want more than their fair share, which would come at the expense of smaller states like Tasmania,” Mr Gutwein said.

“The Hodgman Government will not support any change to the way GST is distributed, full stop.

“We have successfully fought off previous attempts to change the GST that would have disadvantaged Tasmania, and we will do so again.”

In the paper, the Treasurer uses Western Australia as a “case study” for GST allocation.

“The fact that Western Australia now finds itself in a difficult financial situation is not the fault of [Horizontal Fiscal Equalisation] or the GST distribution method,” the paper states.

“The decline in Western Australia’s share [of GST revenue] was predictable and well known by the Western Australian Government”.

Treasury Opposition spokesman Scott Bacon said Labor was “disappointed” the state government did not take up their offer to make a bipartisan representation to the Prime Minister on GST during COAG.

Both parties strongly believe GST revenue allocation should not be changed.

“Clearly the Federal Liberals remain committed to changing the way GST is distributed and that is bad news for Tasmania,” Mr Bacon said.

“It is going to take more than mere words and a discussion paper to stop this monumental threat to Tasmania.”

The Commonwealth Grants Commission says Horizontal Fiscal Equalisation is a way to distribute GST so that every state has enough funds to provide services and infrastructure at the same standard.

The commission assesses each state’s ability to raise revenue, their costs and associated investments, then recommends how to distribute GST funds so states which are weaker can develop their capacities.